25 March 2013

Doing Business Or/And Investment In Iskandar Malaysia

An article from Business Times featured on last week, on what to do before deciding to move to Iskandar Malaysia. There are several things to note:

1. National Priority - There are additional rules of course. The state of Johor does not permit foreigners to buy double-storey shophouses or single-storey houses, whether linked, terraced or detached. Three-storey shophouses, double-storey houses, vacant bungalow land, condominium units and service apartments are permitted so long as they each cost RM500,000 (S$199,384) or more. The state also charges RM10,000 for each successful application for approval. Purchases of industrial properties must be made in the name of a locally incorporated company. This, however, does not apply to residential and commercial properties.

2. Bumiputra Policies - If the vendor is a bumiputra or a government agency, purchasing land valued at RM20 million or more is seen as divestment by bumiputra interests and the approval of the Economic Planning Unit (EPU) of the Ministry of Finance is required. It will usually approve the sale on condition of 30 per cent bumiputra equity participation in the project.

3. Economic benefits - Pioneer status which relieves an enterprise from income tax on its profits could see the limit of statutory income which is exempted from tax increased from the usual 60-70 per cent range to 100 per cent. The period of exemption could also be extended from five to 10 years. Likewise, investment tax allowance could be increased from 60 per cent of qualifying capital expenditure to 100 per cent of such expenses. Foreign investors should confer with Irda sooner rather than later on their business plans to have a feel of the level of incentives they can expect to avoid disappointment. Many things in Malaysia are going up the value chain and while land is plenty, labour is not.

4. Across borders - A metropolis without the construct of national boundaries is the idea behind Iskandar. Does the idea of people working, living and playing across two countries seem so hard in this part of the world?

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